July Reporting Roundup: Honest Reporting Contest Edition

Late due to NWMLS data shenanigans, it’s time once again for the monthly reporting roundup, where you can read my wry commentary about the news instead of subjecting yourself to boring rehashes of the NWMLS press release (or in addition to, if that’s what floats your boat).

First up, let’s have a look at the source material for this comedy spectacular, the NWMLS press release: Housing market hits “trifecta”

Housing activity during July held few surprises for members of Northwest Multiple Listing Service, although some brokers wonder why more buyers aren’t taking advantage of historic low interest rates. Both pending sales and median prices on closed sales showed slight improvement from the previous month, according to the latest report from NWMLS.

“It’s a housing trifecta,” declared Meribeth Hutchings, a director for Northwest Multiple Listing Service when asked to comment on activity for the month of July.

The combination of the lowest interest rates on record, plenty of inventory and low prices offer an unprecedented opportunity for buyers, Hutchings explained. The broker/owner of Windermere Real Estate/Lake Stevens Inc. said homes have never been this affordable in her 28 years in the business.

Dick Beeson, NWMLS director and broker/owner at Windermere Commencement Associates in Tacoma, suggested the market has adjusted to a “non-stimulus environment.” The lack of a tax credit has caused some buyers to postpone their purchase, he said, but added, “Many others are continuing to take advantage of superlative interest rates and bargain prices.”

Hutchings said business was “typical” for July, “usually a slow month because of vacations.” Nevertheless, she noted, despite the expiration of the tax credit, sales volumes for her office were comparable to a year ago.

Wow, that may be some kind of record for cramming the most nonsense into the smallest amount of text. In the interest of time, I’ll just focus on the two most egregious lines of malarkey.

First we’ve got Ms. Hutchings’ claim that “homes have never been this affordable.” This claim is so ridiculous it’s hilarious. Here’s a look at King County’s affordability index as far back as NWMLS price data goes:

King County Affordability Index

Homes have been more affordable than they are now from 1993 through early 2005. But perhaps when Ms. Hutchings said “28 years” she meant “the 2 or 3 years between 2006 and 2008.”

We’ve also got the delightful one-liner that July was “typical… because of vacations.” Also incredibly easy to prove as a lie:

King County Closed SFH Sales

Does this July look like something you would describe as “typical”?

Let’s make this month’s reporting roundup into a little contest to see who can print the most honest reporting. The real story this is a two-parter:

  1. Closed home sales plummeted (thanks to the tax credit expiration).
  2. The median price bumped up because low end sales dried up (see #1).

If a reporter told their story while hitting on both those facts, they get full credit in our contest. Bonus points if they actually managed to catch the monkey business with sales counts that I have been howling about the last few days.

So, will any of our local papers receive full credit for telling the real story this month? Read on to find out.

Eric Pryne, Seattle Times: King County home sales melt in July, but median price rises

Fewer sales. Higher prices.

That’s the abridged version of how the real-estate market fared in King County in July.

With expired federal tax credits no longer an incentive, home sales dropped. Buyers closed on 1,474 houses in the county last month, according to statistics released Thursday by the Northwest Multiple Listing Service.

But the median price of the houses that sold last month was $399,950, highest since December 2008. The median price was up more than 4 percent from last July, and was just the second monthly year-over-year increase since January 2008.

Real-estate professionals attributed the increase to a shift in the makeup of properties that sold. With fewer first-time buyers in the market because of the expiration of the tax credits, higher priced properties made up a larger share of sales in July, they said.

In Seattle, for instance, 40 percent of the houses that closed in July sold for $500,000 or more, compared with just 26 percent in the same month last year, Windermere Real Estate spokeswoman Sonja Riveland said in an e-mail.

Impressive. Mr. Pryne starts us off strong, hitting both point #1 and #2, and even managed to get some local real estate professionals on record with #2. 100% on our test, nice going! Unfortunately, Eric doesn’t get any bonus points, as he repeats without question the demonstrably false claim that “buyers closed on 1,474 houses in the county last month.”

Gerry Spratt, Seattle P-I: Seattle home prices up double digits for first time since 2007

Prices for single-family homes in Seattle rose 10 percent in July compared with the same period a year ago – the first double-digit increase since August 2007, when prices rose 10.1 percent over the previous year.

While prices made impressive gains, sales showed some signs of slowing in the aftermath of federal tax credits expiring. Pending sales for single-family homes, the best barometer of recent market activity, were down 26.48 percent over last year. Closed sales dropped 16.33 percent, with 497 transactions completed in Seattle.

Bummer! Mr. Spratt completely falls for the “prices were higher” line, and while he did pick up on the lower sales, for some reason he decided to soften the language by describing an abrupt flip from YOY gains to the biggest drop in over a year as “some signs of slowing.” I’m going to have to give him half credit on #1 and no credit on #2, and no bonus points, for a final score of 25%. Ouch!

Mike Benbow, Everett Herald: Snohomish County home sales drop 15% despite low mortgage rates

Home sales in Snohomish County dropped by 15 percent last month compared to a year ago, and pending sales were down 25 percent, the Northwest Multiple Listing Service reported Thursday.

The sales drop was expected because of the poor economy and the lack of tax incentives that had been available to buyers this spring.

Meribeth Hutchings, a Lake Stevens Windermere broker who is on the listing service board, also noted that sales are typically down in July because a lot of people take vacations.

Home prices continued to fall in the county in July. The combined median price for homes and condominiums, meaning half the homes sold for more and half sold for less, was $270,000, about 7.5 percent less than a year ago, when the median was $292,000.

Interesting take. Mr. Benbow looks only at the near-useless houses+condos median, and ignores the month-over-month gain brought on by the expiration of the tax credit. Unfortunately, I’m going to have to give him half credit on the median price question for making it even more useless than it already is. Full credit for the sales drop. Score: 25%.

Kathleen Cooper, Tacoma News Tribune: Pierce County has more home sellers, fewer buyers

More homes are on the market in Pierce County and fewer are selling. But median home prices held steady for the second month in a row and were down only 3.73 percent from a year ago, according to data released Thursday.

The Northwest Multiple Listing Service’s monthly report showed the median price for single-family homes and condos in July was $219,970, up just $20 from June.

Overall, July’s report wasn’t good news. The data show year-over-year increases in inventory and a decline in closed sales.

Ms. Cooper got the lower sales, but her comments about median prices completely ignore the effect of pulling out the low end of the market. Half credit for Ms. Cooper, and no bonus points. Final score: 50%.

Rolf Boone, The Olympian: Thurston home sales slide in July

Thurston County home sales fell 12 percent last month compared with July 2009, driven down by the lack of a federal tax-credit program and an uncertain job market, according to Northwest Multiple Listing Service data released Thursday.

County home sales fell to 249 units last month from 284 units in July 2009, and last month’s totals also were lower than the 296 units that sold this June, the combined single-family residence and condominium data show. Median prices fell in the same period, down 4 percent to $234,900 last month from $245,000 in July 2009.

[Thurston County Realtors Association President Mark] Kitabayashi, though, sees a silver lining in the county’s housing market. More soldiers are expected to return to Joint Base Lewis-McChord in the coming months, which might translate into more home sales, and he also sees home prices and the rate of foreclosures stabilizing. He also isn’t concerned about an increase in the number of homes for sale, which rose above 2,000 units last month. That’s typical for this time of year, and he expects those numbers to fall in the offseason, he said.

More of this “typical” nonsense. Average inventory in Thurston for July, 2000-2009: 1,482. July 2010 inventory: 2,026 (37% higher). Also, if you need to check on the claim that foreclosures are “stabilizing,” just hit the most recent foreclosure post.

As for Mr. Boone’s score in our reporting contest, he hit the falling sales point, and ignored the month-to-month median price “stability,” focusing instead on the 4% YOY drop. Just like everyone else, he misses out on the bonus points. 50% for Mr. Boone.

Final Scores
Eric Pryne: 100%
Gerry Spratt: 25%
Mike Benbow: 25%
Kathleen Cooper: 50%
Rolf Boone: 50%

Winner: Eric Pryne! Congratulations, Mr. Pryne! Better luck next time to everyone else.

(Eric Pryne, Seattle Times, 08.05.2010)
(Gerry Spratt, Seattle P-I, 08.05.2010)
(Mike Benbow, Everett Herald, 08.06.2010)
(Kathleen Cooper, Tacoma News Tribune, 08.06.2010)
(Rolf Boone, The Olympian, 08.06.2010)

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

29 comments:

  1. 1

    Hmmmm….Just before the peak and then major decline here, prices were up and sales were down. We could probably dig up a real estate headline from the spring of 2007 that would have said the same thing.
    I’m not suggesting that history repeats itself and we’re on the way to another 25%+/- decline, but when prices rise ( even though prices aren’t really rising now, it’s just that there are fewer buyers of lower end homes), sales generally decline at some point in the near future.
    But as far as reporting goes, I miss Aubrey Cohen reporting on real estate. He seemed to be a little more thorough and willing to present opposing viewpoints.

    Rate this comment: Thumb up 0

  2. 2
    ray pepper says:

    So much of the Media (and Moody’s) appear to try to bring back some “Animal Spirits” to this market place but its futile.

    We can analyze all day long but people will continue to short sale, deed in lieu, and foreclose their homes for many years to come thus keeping a lid on any kind of appreciation that is significant.

    Patience to Buyers is critical and you will know you found a GEM when you calculate the cost to own is in line with the cost to rent. Its just that simple. In Nevada and Arizona I see it everyday. These 300k homes that are now 80-100k sell and the cycle starts again with a homeowner on a level playing field. All these homes need to come back or the FED needs to get serious and cramdown these principles for owners to stay.

    I gotta say it………………….People will only remain stupid for so long…….

    Rate this comment: Thumb up 0

  3. 3
    Dave0 says:

    RE: Ira Sacharoff @ 1 – Another major trend before the peak was inventory rising as sales declined. That scenario happened again in July. I wonder if it is the start of a trend, possibly showing the first sign of more price declines.

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  4. 4
    Dave0 says:

    By ray pepper @ 2:

    I gotta say it………………….People will only remain stupid for so long…….

    Not so sure about that, the masses have been stupid for a while, and with our education system getting worse, the masses will remain stupid or get dumber over time.

    Rate this comment: Thumb up 0

  5. 5

    Typical July To Me

    If you compare it as only a bit worse than the depression data from 2009.

    Rate this comment: Thumb up 0

  6. 6

    By Dave0 @ 4:

    By ray pepper @ 2:
    I gotta say it………………….People will only remain stupid for so long…….

    Not so sure about that, the masses have been stupid for a while, and with our education system getting worse, the masses will remain stupid or get dumber over time.

    Sorry, but I just can’t resist responding with a couple of quotes:
    HL Mencken said ” Nobody ever went broke underestimating the intelligence of the American public.”
    And Winston Churchill said “. The best argument against democracy is a five-minute conversation with the average voter.”

    Rate this comment: Thumb up 0

  7. 7
    ray pepper says:

    RE: Ira Sacharoff @ 6

    I love it…Those are great!

    I know I can use those two quotes at some point again!

    Rate this comment: Thumb up 0

  8. 8
    Cheap South says:

    RE: ray pepper @ 2

    Nothing new Ray. This has been cooking for 25 years now. You know you are looking at tragedy sooner or later, when people count on two full time salaries to meet basic needs. Homes must come down to the 2x-3x median household income; even if it never happened before in Seattle. We are in uncharted territory for a couple of generations.

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  9. 9
    HappyRenter says:

    “The median price bumped up because low end sales dried up”

    Is this due to the expiration of the tax credit?

    Rate this comment: Thumb up 0

  10. 10

    As to the typical July comment, if you look at the June to July numbers for prior years, it is a bit surprising, but many July months have lower figures than June. Perhaps the rate of drop isn’t typical, but we were expecting that with the tax credit falling off. But just dropping in July isn’t unusual for some reason.

    As to the Times not picking up the sale number issue, I wouldn’t really expect them to. The write up these reports rather quickly, within a couple of hours of the numbers being released, and unless they also track recorded deeds like Tim does, there’s no reason why they would question that number.

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  11. 11

    By HappyRenter @ 9:

    “The median price bumped up because low end sales dried up”

    Is this due to the expiration of the tax credit?

    Almost certainly. We have been discussing that as a possible outcome of the expiration of the credit for a couple of months.

    Rate this comment: Thumb up 0

  12. 12
    RoflCatDown says:

    Prices rising without an accompanying rise in salaries is not a good thing. It is not a recovery if you do not have more people moving into the market to buy, and as prices rise the ability for people to buy something goes away unless their salaries rise at a same or greater rate. Something that hasn’t happened in Seattle.

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  13. 13
    HappyRenter says:

    “sales are typically down in July because a lot of people take vacations.”

    I thought it was the rain that kept people inside causing a slow market. So, when does Seattle usually experience a more active market? In the summer it’s slow because it’s vacation time, but the rest of the year it’s the weather which keeps Seattleites away from the market.

    Rate this comment: Thumb up 0

  14. 14
    Scotsman says:

    RE: ray pepper @ 2

    “I gotta say it………………….People will only remain stupid for so long…….”

    Look Ma- an optimist!! ;-)

    Rate this comment: Thumb up 0

  15. 15
    Comfortably Numb says:

    By Cheap South @ 8:

    RE: ray pepper @ 2

    Nothing new Ray. This has been cooking for 25 years now. You know you are looking at tragedy sooner or later, when people count on two full time salaries to meet basic needs. Homes must come down to the 2x-3x median household income; even if it never happened before in Seattle. We are in uncharted territory for a couple of generations.

    By ray pepper @ 2:

    Patience to Buyers is critical and you will know you found a GEM when you calculate the cost to own is in line with the cost to rent. Its just that simple.

    I gotta say it………………….People will only remain stupid for so long…….

    Agree on all the above. My husband is making over six figures with one of the major Fortune 500’s and I’m currently a stay at home mom for two little ones. A year ago both of us were bringing in two FT salaries, and with daycare costs (scary numbers, folks!) factored in – we just were not comfortable with the (then) housing prices. The current housing prices still have us and many, many of his co-workers who are making comparable salaries staying on the sidelines of the real estate market. We’re currently renting a brand new town home that sold for 500k in 08′ for $1450 a month, and while we fully expect to shell out more for a mortgage – the current housing prices, interest rates nor the 8k incentive have us running to sign anything other than a lease again.

    Common sense seems to have been completely lost in the Seattle real estate market, by both sellers and real estate agents who still seem to have their head up in the clouds with their view of ‘low prices.’ There are many ready and willing buyers here *waves* who are simply waiting for the prices to come back down to earth.

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  16. 16
    DrShort says:

    We’re currently renting a brand new town home that sold for 500k in 08′ for $1450 a month, and while we fully expect to shell out more for a mortgage – the current housing prices, interest rates nor the 8k incentive have us running to sign anything other than a lease again.

    New townhomes are especially undesireable and it’s probably worth about $380K now. If you put down 20% and taxes are around $3K a year, you’d be looking at a total monthly PITI payment of $1,840. But you’d gain around $200 a month in tax savings leaving a net monthly payment of $1640 — no too terribly different from your rent.

    ps. don’t buy a new townhome.

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  17. 17
    Hugh Dominic says:

    although some brokers wonder why more buyers aren’t taking advantage of historic low interest rates.

    because we’re unemployed!

    Rate this comment: Thumb up 0

  18. 18
    David Losh says:

    While in other news:

    “Economists are skeptical that cheaper credit or even more government aid will get Americans shopping more and businesses to hire. They also say some jobs in construction and other housing-related fields, and in manufacturing, will never return to pre-recession levels — a shift in the basic structure of the economy.”

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  19. 19
    Jonness says:

    By Ira Sacharoff @ 6:

    And Winston Churchill said “. The best argument against democracy is a five-minute conversation with the average voter.”

    Thanks Ira. That is a classic! :)

    Rate this comment: Thumb up 0

  20. 20
    drshort says:

    By David Losh @ 18:

    While in other news:

    “Economists are skeptical that cheaper credit or even more government aid will get Americans shopping more and businesses to hire. They also say some jobs in construction and other housing-related fields, and in manufacturing, will never return to pre-recession levels â�� a shift in the basic structure of the economy.”

    The next generation will have big social and economic challenges as job options and wages for low and unskilled workers dwindle. The government needs to take drastic measures to remove overhead and taxes on American labor. We need to start funding health care and retirement through consumption taxes like a VAT rather than taxes and mandates on labor. All that does is push jobs overseas and make US products less competitive.

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  21. 21
    One Eyed Man says:

    RE: drshort @ 20

    Unfortunately, I agree. As much as I hate the idea of a regressive tax structure, global competition makes a modified VAT (basically a sales tax) the most reasonable choice in order to keep domestic goods on a level playing field with imports. An income tax and a true VAT imposed at various stages of domestic production both add to the cost of domestically produced goods and thus hurt the ability of domestic producers to compete. A tax on the ultimate consumer applies equally to both foreign and domestically produced goods.

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  22. 22
    Scotsman says:

    RE: One Eyed Man @ 21

    Naw- drop them all for a national sales tax. Then even drug dealers and cheating business owners have to pay, and there is no need for the IRS and all that government involvement.

    Rate this comment: Thumb up 0

  23. 23
    One Eyed Man says:

    RE: Ira Sacharoff @ 6

    Although most of us tout ourselves as believers in what some refer to as Jeffersonian democracy, that is to say, the idealistic and egalitarian form of democracy that champions the collective wisdom of the common man, when times are tough we all seem to show our true colors as Hamiltonian elitists. Just like Hamilton championed the need for the electoral college in the Federalist Papers, all of us seem to have lost faith in the collective ability of the common man to reach a decision likely to lead to a better future. I would say God help us wrestle with the hypocrisy that causes us to abandon our own ideals, but ironically, I’m an agnostic and have little if any faith that my prayer will be answered.

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  24. 24
    David Losh says:

    What I think is that there should be an incentive for small business, and a penalty for corporations.

    The acquisitions, and mergers of the 1980s over burdened the global economy with the profit incentive rather than sustainable business practices.

    The struggle I have is with profit.

    Worker productivity was in this same article. That’s an odd term, but the point was that worker productivity wasn’t increasing. Who would even track that as a variable? That meant, that if workers couldn’t produce any more that maybe companies would have to hire more people. Well hiring people is the point.

    Fewer workers, less money in circulation. Higher profits doesn’t translate into more consumer spending. A stock market based on profits doesn’t accomplish the goal of economy.

    Capitalism can be a beautiful thing if it is broad based. What I would like to see is a decrease in employee taxes, FICA, for small business, and a tax on corporate profits. Paying out millions in executive bonuses, may cut into profits, but those bonuses are based on profit.

    What I’m saying is that corporations should be forced to spend more, to have more in the way of expenses, or pay that money in taxes. The alternative is that they can make more profits by moving to some other country. It would have to be Third World, because most developed economies, elsewhere, have already figured out that consumers make the economy go around.

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  25. 25
    Scotsman says:

    RE: David Losh @ 24

    “Worker productivity was in this same article. That’s an odd term, but the point was that worker productivity wasn’t increasing. Who would even track that as a variable? That meant, that if workers couldn’t produce any more that maybe companies would have to hire more people. Well hiring people is the point.”

    How much a worker can produce is the single largest factor that controls how much they can be paid. When productivity is low, so are wages. A smart company hires as many workers as it can up to the point where the workers don’t produce enough more to generate any additional profit. The solution is not as you propose- more workers- but rather making workers more productive, typically by giving them capital (tools) to work with. No profits mean no money left over to buy more tools with, means no increases in productivity or wages for workers. But it’s always interesting to read your original thinking.

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  26. 26
    David Losh says:

    RE: Scotsman @ 25

    profit is after capital expenditures, wages, bonuses.

    Let’s see, was it $26 trillion in derivitives? Is it Institutional Investing that is driving the stock market? Didn’t you have a comment about how much banks own and control?

    Profit isn’t being plowed back into the American Economy. Some thing went wrong.

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  27. 27

    By David Losh @ 26:

    Profit isn’t being plowed back into the American Economy. Some thing went wrong.

    Health care legislation and a President that spews anti-business rhetoric at the drop of a hat. Why would they hire when all they want to do is survive and keep a low profile?

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  28. 28
    Tom says:

    Lake Stevens isn’t in King County. So all of the data provided in response is N/A.

    Rate this comment: Thumb up 0

  29. 29
    David Losh says:

    RE: Kary L. Krismer @ 27

    This started in the late 1980s, so I don’t see what today has to do with it. We are only in the after math stages today. Something went wrong.

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